Operator of Yankee Stadium Parking System Strikes Out: With Bonds in Default and Growing Debt to the City, Company Issued Request for Proposals to Redevelop Two Lots

In 1970, Joni Mitchell famously sang about tearing down paradise to put up a parking lot. More than 40 years later, it looks like a financially troubled set of parking lots and garages built in conjunction with the new Yankee Stadium will add a different twist to Mitchell’s refrain.

The parking system, which contains nearly 9,300 spaces, was built with substantial public subsidies, including $238 million in tax-exempt bonds and direct subsidies of $70 million from the state and $39 million from the city. Additionally, about 3 acres were removed from use as city parkland and leased by the city to the parking system. Use of the garages and lots has been well below expectation and the parking system has not generated sufficient revenue to make recent payments to bondholders.

With the Bronx Parking Development Company, which runs the parking system, in default and in need of new revenue, a request for proposals was issued to sublease and redevelop two lots near Yankee Stadium. The responses were due June 5 to the Bronx parking company. Edward Moran, who was hired to restructure the parking company, did not respond to two e-mail requests and a follow-up phone call for information about the number of proposals received and when a selection is expected to be made.

A payment of $6.9 million was due bondholders April 1. The last payment made was in October, when the company drained much of its reserve fund to meet its obligation to bondholders. While the bonds were issued by the city’s Industrial Development Agency, the city is technically not responsible for repaying the bondholders.

Yet the city may still lose on the deal. The Bronx parking company has not paid the city any of the $3.2 million in annual rent that has been due since January 2008 nor has it made any of the required payments in lieu of taxes. Under the terms of the lease with the Bronx Parking Development Company, money owed to the city takes a back seat to payments to bondholders if revenues are insufficient to cover both.

In October 2012, it was reported that the parking company owed the city $25.5 million. City financial documents that IBO receives do not specify how much is currently owed by the Bronx parking company. Neither Moran nor the Mayor’s Office of Management and Budget responded to several requests for this information.

Although the Yankees demanded a parking system able to hold about 8,700 cars plus 600 for its own use—more parking spots than were available for the old stadium even though the new stadium holds about 6,600 fewer fans—the team itself bears no financial responsibility for the garages and lots.

Even on game days, use of the Bronx parking company’s system has been much lower than expected. A number of factors contribute to this, not the least of which is cost. The price for parking at the system’s garages and lots is higher than at the old stadium, and on game days can run as much as $48 for valet parking. There are cheaper parking alternatives nearby at the Gateway Mall and more fans are taking public transit to the game than in the past, especially after the opening of the new Metro-North railway station in 2009. Ironically, the recent request for proposals to redevelop the lots on 151st Street between River and Gerard Avenues touts the site’s easy accessibility by public transportation as a prime selling point.

Last March, City Comptroller John Liu issued an audit report critical of a number of Industrial Development Agency deals, including the one with Bronx Parking Development Company. The Comptroller’s office contended that the projections of revenue from the parking system “…were based on questionable occupancy rates and inflated attendance figures and did not account for demand fluctuations that would result from price increases and competition.”

While the default sparked the effort to redevelop two of the lots and bring in more revenue for the fiscally challenged parking company, it has also brought some new players into the saga of the parking system—including a major proponent of building a new stadium for the Yankees. Creditors hired Bracewell & Giuliani, the firm of former Mayor Rudolph Giuliani, to represent them in negotiations with Bronx Parking Development Company. The parking company agreed to pick up the tab for Bracewell & Giuliani and has budgeted $240,000 in 2013 to pay the Mayor’s firm.

But none of the expected $7.1 million in parking company operating expenditures this year include rent or payments in lieu of taxes owed to the city. As the saying goes, wait till next year.